The Inter-American Development Bank (IDB) approved a US$30m loan to support the short-term financial sustainability of the Micro, Small and Medium Enterprises (MSMEs) in Barbados to maintain employment in the face of the COVID-19 crisis and its effect on the productive sector.
The purpose of the loan is to help the MSMEs affected by the pandemic overcome temporary liquidity problems, protect jobs and, at the same time, allow business continuity and operations. Even though the health emergency has been controlled so far, the crisis created by COVID-19 has resulted in severe social and economic challenges. Due to the COVID-19 pandemic, the economy contracted 14.9 percent in the first semester of 2020 and the expected outlook for 2020 is a 11.6 percent contraction.
MSMEs comprise 96.3 percent of formal enterprises in the country. A large majority are micro (45.3 percent) and small (46.9 percent), while mid-sized firms (26 to 50 employees) account for 4.1 percent of firms. MSMEs contribute to 64.1 percent of the national added value and account for approximately 60.7 percent of employment.
This program will support credit guarantees for individual investment loans to be undertaken by eligible MSMEs. Guarantees may support working capital loans for expenses, including supplies or merchandise, payroll and utilities, among others. The idea is to ensure the recovery, improvement and maintenance of economic activity in the short term.
The resources under this intervention will be directed both to MSMEs affected by the COVID-19 crisis and to their overarching strategic chains, giving priority to sectors identified in the vulnerability assessment.
The US$30m IDB loan has a repayment period of 25 years, a grace period of five and a half years and an interest based on LIBOR.